Number of FTEs that perform the process "select suppliers and develop/maintain contracts" per $1 billion purchases

This measure calculates the number of full-time equivalent employees (FTEs) per $1 billion purchases employed to select suppliers (typically through a request for information [RFI], request for proposal [RFP], or request for quote [RFQ] process) to create business value, reduce cost, and ensure quality. It is part of a set of Process Efficiency measures that help companies optimize the performance of their "select suppliers and develop/maintain contracts" process by minimizing waste and refining resource consumption.

Benchmark Data

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Measure Category:
Process Efficiency
Measure Id:
101138
Total Sample Size:
2,215 All Companies
Performers:
25th
Median
75th
Key Performance
Indicator:
Yes

Compute this Measure

Units for this measure are FTEs.

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(Number of FTEs who perform the process group "procure materials and services" * Percentage of FTEs performing procurement processes dedicated to selecting suppliers and developing/maintaining contracts * .01) / (Value of all materials and services purchased * .000000001)

Key Terms

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FTE - (full-time equivalent employee)

To calculate the number of full-time equivalents employed during the year for each respective process or activity, you must prorate the number of employees and the hours spent performing each process/activity. Assume that a full-time worker represents 40 hours per week. Provide the average number of full-time equivalents employed during the year for each respective process. Include full-time employees, part-time employees, and temporary workers hired during peak demand periods. Allocate only the portion of the employee's time that relates to or supports the activities identified for an applicable process. Prorate management and secretarial time by estimating the level of effort in support of each activity, by process.

For example, a part-time secretary in the finance department for XYZ, Inc. charges all of his time to finance department activities. He works 20 hours per week. The secretary splits his time evenly supporting employees working in the general accounting process and the financial reporting process. Thus, his time should be allocated by process. So, if he works throughout the year and supports these two processes, his time would be split evenly as:

20hrs/40hrs = .5FTE * 50% for general accounting = .25FTE for general accounting

20hrs/40hrs = .5FTE * 50% for financial reporting = .25FTE for financial reporting

Process efficiency

Process efficiency represents how well a process converts its inputs into outputs. A process that converts 100% of the inputs into outputs without waste is more efficient than one that converts a similar amount of inputs into fewer outputs.

Median

The metric value which represents the 50th percentile of a peer group. This could also be communicated as the metric value where half of the peer group sample shows lower performance than the expressed metric value or half of the peer group sample shows higher performance than the expressed metric value.

Measure Scope

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Cross Industry (7.2.1)

  • 4.2.3.1 - Select suppliers (10288) - Evaluating the pros and cons of various suppliers. Choose the most appropriate and cost-effective suppliers on the basis of their material quality, delivery schedules, and costs.
  • 4.2.3.2 - Certify and validate suppliers (10289) - Validating the supply sources, and provide certification as an official supplier.
  • 4.2.3.3 - Negotiate and establish contracts (10290) - Legally binding suppliers with the company. Negotiate contracts individually with all the suppliers that include the promised material delivery, the delivery dates and duration, etc.
  • 4.2.3.4 - Manage contracts (10291) - Keeping contracts up-to-date with routine evaluation. Maintain order and discipline with the contracts in order to avoid any loss of information and mishaps.